Volkswagen to Save Billions with Job Cuts

Volkswagen has announced a deal with workers on job cuts that will result in significant savings for the company. The German carmaker plans to reduce administrative staff costs at the Volkswagen brand by 20% as part of a larger restructuring effort to cut group costs by EUR10 billion. This move is intended to help the brand achieve its goal of 6.5% profitability by 2026, generating earnings of EUR10 billion in the same year.

To achieve these cost reductions, Volkswagen will implement various measures including an extension of the partial retirement plan for staff born in 1967 and a hiring freeze. Additionally, the company will focus on reducing development times and making improvements in procurement.

Expectedly, analysts predict that the Volkswagen brand's earnings before interest and taxes will amount to EUR3.06 billion this year, with a decline to EUR2.28 billion projected for 2024. In comparison, the brand recorded EUR2.65 billion in EBIT last year.

These job cuts come at a time when the United Auto Workers in the U.S. is actively recruiting workers at Volkswagen's Tennessee plant to unionize for higher wages.